THE UNITS, CONSISTING OF SHARES OF COMMON STOCK AND WARRANTS TO PURCHASE SHARES
OF COMMON STOCK (THE "SECURITIES") REPRESENTED BY THIS SUBSCRIPTION AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR QUALIFICATION UNLESS THE COMPANY SHALL HAVE RECEIVED A
WRITTEN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH PROPOSED SALE, TRANSFER
OR OTHER DISPOSITION IS EXEMPT FROM SUCH REGISTRATION OR QUALIFICATION.
This is a Subscription Agreement (the "Agreement"), dated as of the date
specified below, between Superconductive Components
, Inc., an Ohio
(the "Company"), and the person named below as the subscriber ("Subscriber").
A. The Company is offering to sell up to 1,200 Units (the "Units"), each
Unit consisting of 1,000 shares of the Company's common stock without par value
(the "Common Stock") and a warrant to purchase 250 shares of Common Stock at
$3.00 per share until October 14, 2010 (the "Offering"), as more fully described
in the Private Placement Memorandum dated October 14, 2005, of which this
Subscription Agreement forms a part.
B. The Units are being offered to accredited investors as defined in Rule
501(a) of Regulation D, at a price of $2,000 per Unit.
C. This Agreement confirms the understanding between the Company and the
Subscriber with respect to the Subscriber's subscription for the number of Units
STATEMENT OF AGREEMENT
In consideration of their mutual promises, the Company and the Subscriber
agree as follows:
Section 1. Subscription for Units. Subscriber hereby subscribes for the
number of Units set forth below and the Company agrees to promptly issue the
requisite number of shares of Common Stock and warrants underlying such Units
upon payment of $2,000 per Unit.
Section 2. Effectiveness of Agreement. The Company reserves the right to
reject this Agreement, in whole or in part, for any reason. This Agreement will
not become effective until this Agreement has been duly accepted by the Company
in the space provided below.
Section 3. Representations and Warranties of Subscriber. In connection with
this subscription for Units, the Subscriber hereby represents and warrants to
the Company as provided in this Section 3. It is understood that the Company
will rely upon these representations and warranties in accepting this Agreement
and that such representations and warranties will survive delivery and
acceptance of this Agreement.
(a) The Subscriber has received copies of the Company's filings with the
Securities and Exchange Commission (the "Commission") which outline the
terms of the Common Stock underlying the Units, has reviewed the same and
consents to all of the conditions and terms described therein.
(b) The Subscriber acknowledges that he has received copies of or has been
afforded the opportunity to examine and copy all desired documents, books
and records relating to the Company. The Subscriber acknowledges that: (i)
he has received and read the Company's Commission filings, (ii) he
understands the information included therein, (iii) he is aware that there
are economic variables and risks that could adversely affect an investment
in the Units, (iv) he, or his business, tax and legal advisers, if any,
have reviewed the documents and information relating to his subscription
for the Units and they have advised him as to the merits of the Units, (v)
he, or his advisers, have had ready access to any and all documents which
the Subscriber or they deem relevant to the purchase of such Units and no
requested information, oral or written, has been withheld, (vi) the Company
has made available to the Subscriber, during the course of the transaction
and prior to sale, the opportunity to ask questions of, and receive answers
from, the Company or any person acting on its behalf concerning the terms
and conditions of this offering of Units and the Company, and to obtain any
additional information, to the extent the Company possesses such
information or can acquire it without unreasonable effort or expense, (vii)
he has relied primarily on independent analysis to make an investment
decision with respect to the Units, and (viii) he has not relied on any
representations or warranties other than as set forth herein or in the
terms of the Units.
(c) The Subscriber understands that (i) in reliance upon the Subscriber's
representations, neither the Units, nor the underlying shares of Common
Stock, warrants, or shares of Common Stock issuable upon the exercise of
such warrants have been registered under the Act or any state securities
laws, (ii) since the Units, the underlying shares of Common Stock,
warrants, and shares of Common Stock issuable upon the exercise of such
warrants have not been registered, the Subscriber must bear the economic
risk of holding such shares of Common Stock until Rule 144 is available to
Subscriber, (iii) the Company will note the restrictions on resale set
forth above on its transfer records and any certificates of ownership or
common stock purchase warrants, (iv) neither the Company nor anyone else
has undertaken to register for resale any of the warrants or shares of
Common Stock underlying the Units under the Act, and (v) there is no
guarantee that a trading or resale market for the shares of Common Stock
will exist in the future.
(d) The Subscriber is acquiring the Units and the underlying shares of
Common Stock and warrants for his own account, for investment only, and not
with a view to or for the sale, distribution or fractionalization thereof.
(e) The Subscriber's overall commitment to investments which are not
readily marketable is not disproportionate to his net worth, and his
investment in the Units will not cause such overall commitment to become
(f) The Subscriber has adequate means of providing for his current needs
and personal contingencies, and has no need for current income or liquidity
in his investment in the Units.
(g) The Subscriber is able to bear the economic risks of this investment in
the Units and can afford a complete loss of such investment.
(h) The Subscriber has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of
an investment in the Units.
(i) The Subscriber received the terms of the Units and first learned of the
offering of Units in the State which is listed as the residence or
principal office address of the Subscriber below.
(j) With respect to the legal aspects of the investment, the Subscriber has
relied solely upon the advice of the Subscriber's own legal advisors.
Section 4. Covenants of the Subscriber. The Subscriber will furnish to the
Company such information or additional verifications as the Company may
reasonably request and will cooperate with the Company in obtaining such
additional information or verifications from third parties as the Company may
reasonably request for the purpose of confirming the representations and
warranties of the Subscriber set forth in Section 3 of this Agreement and
perfecting the exemption from registration under the federal and state
Section 5. Sale of Shares. The Subscriber agrees that he will not sell,
pledge, fractionalize or otherwise dispose of any of the shares of Common Stock
underlying the Units or shares of Common Stock obtained from the exercise of
warrants underlying the Units, unless counsel, satisfactory to the Company,
shall have advised the Company, in a written opinion satisfactory to it, that no
registration under the Act or any state securities act would be required in
connection with the proposed sale, pledge or other disposition and the proposed
sale, pledge or other disposition is consummated as contemplated by such
Section 6. Registration Rights
(a) Registrable Securities. As used herein the terms "Registrable
Securities" and "Registrable Security" means the shares of Common Stock
underlying a Unit or issued upon the exercise of warrants underlying a Unit
(collectively, the "Unit Shares") and any shares of Common Stock issued
upon any stock split or stock dividend in respect of such Unit Shares;
provided, however, that with respect to any Registrable Security, such
security shall cease to be a Registrable Security after October 14, 2010,
or when, as of the date of determination, (i) it has been effectively
registered under the Securities Act, (ii) it is freely tradeable without
limitation on the number of Shares transferable by the holder thereof
pursuant to an exemption from registration provided by Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act"), or (iii) it has
ceased to be outstanding.
(b) Resale Registration Statement. If, at any time after the date hereof
and prior to close of the Offering, two or more investors (or related
parties) each purchase at least 250 Units (representing $500,000 of the
Registrable Securities), then within ten days of the consummation of the
purchase of the second allotment of 250 Units the Company shall begin the
process of preparing and filing with the Securities and Exchange Commission
a registration statement covering the Subscriber's Registrable Securities
(the "Resale Registration Statement"), and shall use reasonable efforts to
have the Resale Registration Statement declared effective under the Act by
the Securities and Exchange Commission. Upon the effectiveness of the
Resale Registration Statement, the Company will use commercially reasonable
efforts to keep the Resale Registration Statement open until such time as
all of the Registrable Securities have been sold, or such time as all of
the Registrable Securities are freely tradeable without limitation on the
number of Shares transferable by the holder thereof pursuant to an
exemption from registration provided by Rule 144 promulgated under the Act.
The Company shall bear all of the expense of the Resale Registration.
(c) Piggyback Registrations. If, at any time after the date hereof and
before October 14, 2010 the Subscriber owns any of the Registrable
Securities, the Company proposes to prepare and file with the Securities
and Exchange Commission one or more registration statements covering equity
or debt securities of the Company with a value exceeding $1,000,000 (in any
such case, other than on Form S-8 or S-4 or successor forms), it will give
Subscriber at least 15 days' prior written notice via overnight courier or
certified mail (the "Notice"). Upon written request of Subscriber, made
within 10 days after mailing of the Notice, that the Company include any of
the Subscriber's Registrable Securities in the proposed registration
statement, the Company shall use reasonable efforts to effect the
registration under the Act, and any underwriting involved therein, of the
Registrable Securities which it has been so requested to register but only
to the extent that such inclusion does not diminish the number of
securities included by a holder of Common Stock who has demanded such
registration (the "Piggyback Registration"); provided, however, that if in
the written opinion of the Company's managing underwriter, if any, for such
offering, the inclusion of all or a portion of the Registrable Securities
requested to be registered, when added to the securities being registered
by the Company, will exceed the maximum amount of the Company's securities
which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without otherwise materially adversely
affecting the entire offering, then the Company may exclude from such
offering all or a portion of the Registrable Securities which it has been
requested to register. The Company shall bear all of the expense of the
Piggyback Registration, except for the pro rata portion of brokerage or
underwriters' discounts or commissions relating to the shares sold on
behalf of the Subscriber. All of Subscriber's Piggyback Registration rights
under this Agreement shall expire on October 14, 2010. Notwithstanding
anything to the contrary herein, the Company shall have the right at any
and all times after it shall have given written notice pursuant to this
Section to elect not to file any such proposed registration statement, or
to withdraw the same after the filing but prior to the effective date
(d) Subscriber Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 6
that the Subscriber shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended methods of
disposition of such securities as shall be required to timely effect the
registration of its Registrable Securities.
(e) Holdback Agreement. As long as Subscriber holds any Registrable
Securities, Subscriber hereby agrees that it shall not sell or otherwise
transfer any securities of the Company during the period of time as the
managing underwriter and the Company shall agree (but not less than 90 days
nor more than 180 days) beginning on the effective date of any registration
statement, other than the Registrable Securities to be sold pursuant to
such registration statement.
Section 7. Successors and Assigns. This Agreement, upon its effectiveness
as provided for in Section 2 of this Agreement, shall be binding upon the heirs,
executors, administrators and successors of the Subscriber, and shall inure to
the benefit of the Company and its successors and assigns. This Agreement is not
transferable or assignable by the Subscriber.
Section 8. Interpretation. Words used herein, regardless of the gender
specifically used, shall be deemed and construed to include any other gender,
masculine, feminine, or neuter, as the context requires.
Section 9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
contained herein and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties, express or implied, oral or
written with respect to the subject matter hereof. This Agreement may not be
amended or modified in any way except in a writing signed by each of the parties
Section 10. Governing Law. This Agreement shall be construed in accordance
with and governed in all respects by the laws of Ohio
, without regard to its
conflicts of laws rules.
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The Subscriber has executed this Agreement as of the date written below.
THE SUBSCRIBER MUST COMPLETE THE FOLLOWING (PLEASE PRINT):
1. PART I - All Subscribers must complete PART I.
2. PART II must be reviewed by all Subscribers. Initial any item in PART II
that is applicable, and sign and date the Agreement.
PART I - General Information (all Subscribers)
Name of Subscriber (Print) The Estate of Edward R. Funk
Total Subscription Price ($2,000 x Number of Units Subscribed for) $188,000
Form of Subscriber (check one): Individual ___ Corporation ___
Other (specify): Estate
If an Entity, Names of Individual Equity Owners ________________________________
Address of Residence
(or principal office 41 S. High Street
if an entity) Street or P.O. Box Number
City State Zip
Telephone number (614) 227-2000
Mailing Address _________________________
(if different) Street or P.O. Box Number
City State Zip
Social Security Number or Tax Identification Number 16-6538139
PART II - Accredited Investors
The Subscriber is an accredited investor under Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933 (the "Act") for the following
reasons. (Please initial each of the statements below which are applicable to
the Subscriber named above):
---------- The Subscriber is a natural person whose individual net worth,
or joint net worth with that person's spouse at the time of
his/her purchase, exceeds $1,000,000.
---------- The Subscriber is a natural person who had an individual income
in excess of $200,000 in each of the two most recent years or
joint income with that person's spouse in excess of $300,000 in
each of those years and who reasonably expects the same or
greater income level in the current year.
--------- The Subscriber is a bank, savings and loan association,
registered broker-dealer, insurance company, investment
company, private business development company, or licensed
small business investment company.
--------- The Subscriber is an employee benefit plan established and
maintained by a state, its political subdivision, or their
agencies if such plan has total assets in excess of $5,000,000.
--------- The Subscriber is a self-directed employee benefit or pension
plan, with investment decisions made solely by persons who are
--------- The Subscriber is a trust, with total assets in excess of
$5,000,000, not formed for the purpose of acquiring the
securities offered hereby, whose total purchase is directed by
a financially sophisticated person.
--------- The Subscriber is a director or executive officer of the
--------- The Subscriber is a charitable or other organization described
in 501(c)(3) of the Internal Revenue Code, or any corporation,
partnership, or business trust, not formed for the purpose of
acquiring the securities offered, with total assets in excess
--------- The Subscriber is an entity in which all of the equity owners
are accredited investors.
To the best of my knowledge and belief, the above information supplied by
me is true and correct in all respects, and I am aware and intend that
, Inc, may rely upon such information to determine the
Subscriber's suitability as an investor in the Units.
Date: October 14, 2005 /s/ Curtis A. Loveland, Executor
Signature of Subscriber
(indicate title, if applicable)
Date: __________, 2005 ----------------------------------------
Signature of Subscriber
(indicate title, if applicable)
The Company hereby accepts the foregoing Subscription as to 94 Units as of
the date set forth immediately below.
Date: October 14, 2005 By: /s/ Daniel Rooney